If Donald Trump Scares You, You Should See a Depression

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Guest post by Lee Presser.

America’s fiscal year is October 1 to September 30.  With two month left in FY16, the U.S. Treasury has already paid creditors $380,925,428,211.67 in interest costs.  (That’s $381 Billion)  http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

The average interest rate was just over 2%http://www.treasurydirect.gov/govt/rates/pd/avg/2016/2016_07.htm

 It is expected that the last two month’s of this fiscal year, interest costs will increase another $45 to $66 Billion.  The total FY16 interest cost may be between $426 and $447 Billion. 

 In FY11, the Treasury paid creditors a record $454,393,280,417.03.  (That’s $454 Billion) 

 With the debt at $19.4 Trillion (that’s 19,400 billions of dollars) what do you suppose the interest costs to the Treasury will be when the annual interest rate returns to normal?  (Normal would be 4% to 6%)

 In fiscal year 2015, the federal budget was $3.8 trillion.  Of that amount only $1.11 Trillion was spent on what budgeters call discretionary items; food and agriculture, transportation, social security & unemployment & labor, science, energy & environment, international affairs, housing & community, veteran’s benefits, Medicare & health, education, government, and military. 

 The other $2.69 Trillion was spent on interest and what budgeters call mandatory items; spending on programs that are required by existing law.  Medicare and Social Security are the two largest mandatory spending programs.  They are about 40 percent of the federal budget.  Agriculture, Defense, Education, and Veterans Affairs, also require mandatory spending. 

 As interest costs increase, either discretionary spending decreases or the annual deficit increases.  Mandatory spending is unaffected unless Congress changes the law.  Those mandatory checks always go out. 

 So, when interest goes from $426 Billion per year to $600 Billion per year, $174 Billion in programs that serve you and your neighbors must be cut.  Or, Congress can increase the money supply to continue paying for the programs, which, as you would expect, will lower the purchasing power of your paycheck. 

 Of course, we could vote in new leadership and change the trajectory of government expenditures.  But, for most of you, that’s way too scary. 

Chili Palmer

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The greatest mob movie of all time was Get Shorty. (Please, don’t argue.) The whole movie revolved around this exchange:

Ronnie Wingate: Excuse me bro’, but who the fuck are you?
Chili Palmer: I’m the one tellin’ you how it is…

Last Sunday, Greece was Chili Palmer. A few days later, Angela Merkel is.

 

Funny how things change.

You probably heard that Greece’s Prime Minister called for a referendum on the troika’s terms. And the PM encouraged Greeks to vote no. And the Greeks did—by a whopping 61-39 laugher.

Turns out, though, Prime Minister Tsipras was sort of bluffing. He expected Greeks to vote Yes no matter what he told them. In other words, he doubted his own mandate.

He hoped Greek voters would accept the Troika’s terms, reject his leadership, and make the whole thing somebody else’s problem.

When Greece followed Tsipras’s advice and rejected the offer, Tsipras fired the mastermind of the strategy, Marxist game theorist Yanis Varoufakis. Varoufakis rode is motorcycle into the sunset.

As last Monday morning dragged on, Tsipras turned his blinking eye toward Germany and . . . and needed to change his pants. In the North stood Europe’s Chili Palmer who goes by the name Angela Merkel—pronounced, like her policies, with a hard “G.”

Tsipras offered to accept the Troika’s terms—the ones his people had just overwhelmingly rejected. Merkel spake “nein!”

Now, Germany, Finland, and other Eurozone members are laying out terms Greek can’t accept. The alternative is a five-year leave of absense from the Eurozone—a term Greece has little choice but to take. As the Wall Street Journal puts it:

Sunday’s statement on Greece by eurozone finance ministers will go down as one of the most brutal diplomatic démarches in the history of the European Union, a bloc built to foster peace and harmony that is now publicly threatening one of its own with ruination unless it surrenders.

Greece’s new best friend, Vladimir Putin, waits in the wings with oil and gas and gold on ships ready to dock in Greece’s warm-water ports.

The Eurozone isn’t an economic venture: it’s a loan-sharking racket. Europe happily fed Greece’s voracious appetite for debt for over a decade, knowing full well Greece would never make good on the loans.

Why? Exports. The same reason our own establishment freaks out over the Export Import Bank.

Since the creation of the Euro, Germany has pressured European banks to make risky loans to Greece, Italy, Portugal, and other countries. The loans allowed the southern countries to buy German goods. The scheme worked remarkably while while it lasted:

clipped from http://www.zerohedge.com/news/2015-07-12/latest-out-europe-pretty-steady-level-shittiness

Now, Europe owns Greece and doesn’t want it.

What happens next? Who knows. But everyone has learned never to borrow money from Germany or the European Central Bank. Or the IMF, for that matter. Never. Any alternative is better.

I can’t imagine this ends well for Greece, Europe, or the world.

Chili Palmer: Look at me. What I’m thinking is, ‘You’re mine. I fuckin’ own you.’ But what I’m not doing is feeling anything about it one way or the other. You understand? You’re not a person to me, you’re a name in my collection book, a guy who owes me money, that’s all.

I wonder if John Travolta will play Merkel in the movie.

You’ll Never Guess Who’s About to Become Obama’s Biggest Nightmare

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In 2008, we heard all about the youth movement for Obama.  We heard that the enormous Millennial Generation, born between 1982 and 2001, would destroy the GOP and everything America once stood for–like jobs, family, faith, and hard work.  And when Obama won, many believed the tales of the Obama Youth.

But many were wrong. Voters under 30 have had it with vague promises and glittering bullshit from that punk from Chicago.

Meet Crossroads Generation (XG for short).  Crossroads Generation is a great sign for America’s future. XG’s existence shows that Millennials understand how the world works and are willing to fix problems when they arise, just like the 13 previous American generations.

Here’s the stuff that has Millennials up in arms:

  • Student load debt exceeds $1 trillion, and the cost of education is increase twice as fast as healthcare
  • One-third of college graduates are unemployed
  • 42% of college grads under 30 have returned to their parents’ homes
  • 1/2 of young people didn’t go to work on a given day of the week
  • Unemployment rate among Millennials is 25%, double that of any other group, including blacks

Obama promised 5.5% unemployment by 2012. He promised to hold unemployment under 8.0 with the Stimulus.  Obama failed. Obama made it worse.  And millions of frustrated young people who want to work but can’t are holding him accountable.

If the world’s debt-driven economy tanks this year (and there’s a 50% chance),  Obama be driven out on a rail. His champions, the Millennials, will do the driving.

ACTION: If you know anyone under the age of 30, send them this link: http://crossroadsgeneration.com/

NYT Describes Mayhem of “Taxmageddon”, And It Will Scare You Sick

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What the hell’s going on at NYT? First, they do a piece on Andrew Breitbart. Then they warn the world that Taxmageddon will crush the world in 2013, beginning with the USA.

Here’s how Business Insider summarized the David Leohardt article:

Basically, with no changes to current law, taxes will rise for everyone, and after tax, inflation-adjusted income for the average American will drop to 1998 levels.

Read more: http://www.businessinsider.com/nyt-here-comes-taxmageddon-2012-4#ixzz1s9RHtbZC

It’s largest tax increase in the history of Western Civilization, and it will happen if Congress doesn’t stop it. We could be looking at a 5 percent drop in GDP in 2013 alone.

Taxmageddon is the result of decades of borrowing to feed the entitlement monster. Only real entitlement reform will solve it.

The After Party will be at Crowne Plaza Grille at the Crowne Plaza Hotel in Clayton on Thursday, April 19 at 7:00 pm. Join us. Bring a friend.

BTW, David Leonhardt’s strategy for heading off Taxmageddon is electing Mitt Romney president. Imagine that.

This David Stockman Quote Should Scare the Hell Out of Everyone

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Is the US economy about to collapse worse the Greece’s? 

Some, like Paul Krugman, say that it’s okay for governments to print unlimited money.  Others, who have actually managed businesses, say otherwise.

ronald-reagan-david-stockmanDavid Stockman is among the latter.  He was Reagan’s budget director for a few years.  He became a media sensation because of his command of numbers.

He left the White House early, fretting over federal debt.  But debt in the 1980s was as a piggy bank to Wells Fargo.

In an interview with Business Insider, Stockman warned that America’s financial end is nigh, and that you better hope the Lord returns before it gets here.

Here’s the heart of the matter. The Fed is a patsy. It is a pathetic dependent of the big Wall Street banks, traders and hedge funds. Everything (it does) is designed to keep this rickety structure from unwinding. If you had a (former Fed Chairman) Paul Volcker running the Fed today 7/8— utterly fearless and independent and willing to scare the hell out of the market any day of the week — you wouldn’t have half, you wouldn’t have 95 percent, of the speculative positions today. [Emphasis added]

Read more: http://www.businessinsider.com/david-stockman-youd-be-a-fool-to-hold-anything-but-cash-now-2012-3#ixzz1oA6pTfdp

The GOP is our best hope, but its candidates better get their brains around this, and fast.  I really don’t feel like spending the rest of  my life foraging for roots and wrestling nuts from a squirrel.

What Scrooge Teaches Millennials

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This is the fourth in a series. If you haven’t, please read part 1, part 2, and part 3

Because so many school systems have driven great English literature out of students’ hands and minds, it’s possible that some kids never read Charles Dickens’s A Christmas Carol.  If you’ve never read this classic, please do so now.  You need it.

Scrooge_Marley

Back?  Good. Fascinating stuff, isn’t it?  And so much more accessible than David Copperfield, which was my introduction to Dickens.

So now you know that Scrooge was a miser who treated the whole world and all of its inhabitants with a cruel contempt.  Scrooge loved money and nothing else.

But during the course of the story, a series of spirits massage Scrooge’s conscience. They begin with his own happy youth, when Scrooge still enjoyed the presence of other people.  They proceed through Scrooges present and into his future.

Somewhere along the way, Scrooge changes.  He has a conversion. He learns to love others as himself.

If I were a Millennial—those born between 1983 and about 2002—I’d ask myself, “why?”

The spirits didn’t argue politics or morality with Scrooge.  They didn’t tell him his taxes were too low, and they didn’t send bureaucrats to audit his books and extract fines.

Instead, they made it personal.  They showed him his real life—past, present, and future—in living color and 3D.  They simply held up a mirror and provided him clear evidence of what his future would be if remained on the path he’d taken.

Scrooge reformed because he knew a lonely, unhappy death awaited him. He knew that people would mock his memory.

Millennials should take a hard look at our national debt. Not just where it stands, but the direction it’s going.

Look at the amount of debt that Gen X, Boomers, and WWII have saddled you with.  It’s about $50,000 and going up every day.

What did you get for that money?  Not a damn thing, really.  Most of that debt went to pay for people who are already retired. In other words, your grandparents are borrowing money, spending it, and passing the bill onto you.

I know you’re a generous group. You want to help. You believe in this country, and you’re willing to sacrifice to make it stronger.

We all are.  That’s a common trait of Americans.

But how much can you bear?  How much of a debt burden can your generation really handle?

On top of Washington’s $15 trillion in debt and $60 trillion in unfunded liabilities, most states hold hundreds of billions or more in combined debt and future pension obligations.  Those aren’t your pensions, but the pensions of people in older generations.

Well, you weren’t asking for all that debt. Now you’re stuck with it.

Again, how much more can you and our society handle? And does it really help anyone for the government to make promises it can’t keep?

Scrooge looked at “Christmas Yet To Come” and saw his horrible death. Unless he changed.

When I look at America’s future, I see the same.

The spirits gave Scrooge the chance to reform, and he took it.

Will you?